TrendForce: Price Increase in DRAM and NAND Flash memories in Q4

The reports of TrendForce indicate a general increase in prices for both DRAM as if to NAND Flash starting in the fourth quarter. For example, DRAM prices are expected to see a quarterly increase of approximately 3 al 8%. Whether this upward momentum is sustained will depend on how firm suppliers are in maintaining cuts in production and the degree of resurgence in real demand, Being the server market general purpose a critical determinant.

Regarding memory for PC (DRAM), prices are expected to DDR5, which have already increased in the third quarter, maintain their upward trajectory driven by the accumulation of new CPU models. This next cycle of price increases for both DDR4 and DDR5 is incentivizing PC manufacturers to continue purchasing. Although manufacturers still have substantial inventories and there are no imminent shortages, Samsung has been urged to reduce its production further. However, faced with negative gross margins on DRAM products, most manufacturers are reluctant to reduce prices further, instead seeking aggressive increases. This stance sets the stage for an expected increase in DDR4 prices of 0 to 5% and DDR5 by around 3 to 8% in the fourth quarter. Overall, as DDR5 adoption accelerates, an approximate 3-8% quarterly increase in PC DRAM contract prices is projected over this period.

Regarding server DRAM, DDR5 buyers' inventories have increased from 20% in the second quarter to 30-35% recently. However, with only 15% actually being used in servers in the third quarter, market adoption is slower than expected. Meanwhile, Samsung's intensified production cuts have significantly reduced DDR4 wafer inputs, causing a shortage in DDR4 server inventories. This situation leaves no room for further price reductions in DDR4 for servers. In response, manufacturers, aiming to improve profits, are accelerating DDR5 production.

Looking ahead, Q4 forecasts anticipate stable average server DDR5 prices, while server DDR5 will maintain a downward trajectory. With DDR50 shipments increasing and a notable 60-4% price disparity with DDR3, the range's weighted average price is set for an increase. This leads to an estimated 8-XNUMX% quarterly increase in server DRAM contract prices in the fourth quarter.

For mobile DRAM, inventories have returned to healthy levels earlier than other sectors, thanks to price elasticity driving an increase in capacity per device and reinvigorating purchasing enthusiasm in the second half of 2023. On the other hand, although fourth-quarter smartphone production has not reached year-ago levels for the same period, a seasonal increase of more than 10% continues to support demand for mobile DRAM. However, it is crucial to note that manufacturers' current inventories remain high and production cuts have not yet altered the near-term oversupply situation. However, manufacturers, under profit margin pressures, insist on raising prices. For products where inventory is more abundant, such as LPDDR4X or those from older manufacturing processes, an estimated contract price increase of 3 to 8% is expected for the quarter. In contrast, LPDDR5(X) appears to have a tighter supply, with projected increases in contract prices of 5-10%.

For graphics DRAM, niche market dynamics and acceptance of price increases among buyers suggest sustained procurement of 6Gb GDDR16 chips, preparing for expected price increases in 2024. The launch of the new L40s server GPU of NVIDIA in the third quarter is facilitating the reduction of existing inventories of manufacturers. Additionally, gaming notebooks are excelling in sales, outperforming the overall notebook market this year. Consequently, manufacturers experience less inventory pressure for graphics DRAM than for commodity DRAM. This outlook sets the stage for an anticipated 3-8% increase in graphics DRAM contract prices for the fourth quarter.

For consumer DRAM, which includes things like personal computers, Samsung began significant production reductions starting in September to reduce its surplus of old inventory. These cuts are expected to reach 30% in the fourth quarter. Anticipating steadily declining inventories, manufacturers are looking to increase consumer DRAM contract prices, targeting increases of more than 10%, to avoid losses. However, although some producers increased their prices at the end of September, demand remains less enthusiastic than expected. This price deviation runs counter to the expected balance between supply and demand, suggesting a more modest estimated increase of 3-8% in consumer DRAM contract prices for the fourth quarter, below manufacturers' initial targets. .

Source: trend force